TNAG-0621-FCO40-769-Budget-of-Hong-Kong-1977 — Page 127

G.F. 323

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19.

Bank lending

40.

Demand for loans and advances in Hong Kong was rather slack in

1975 but began picking up in the fourth quarter of the year. The increase

continued into 1976. Loans and advances in Hong Kong at the end of the

first, second, third and fourth quarters of 1976 were respectively up

by 90, 11%, 15% and 18% compared with the corresponding quarters in 1975.

The increase in demand for loans and advances appeared to be higher in

the financial sector. Loans and advances to this sector at the end of

1976 were 29% higher than a year ago; they were 20% higher at the end

of the third quarter (comparisons for earlier quarters were not possible

because before the third quarter of 1975 statistics on loans and advances

of individual sectors included loans and advances made abroad). Consistent

with this development, the stock market in 1976 was generally more active

than in 1975 with total turnover in 1976 at HK$ 13,155 million, representing

a 27% increase over total turnover in 1975. The Hang Seng Index at the

end of 1975 reached 448, 28% higher than at the end of 1975.

୮

Table 21 and 22 J

41.

}

Loans and advances abroad showed higher growth than loans and

advances made in Hong Kong. At the end of the first, second, third and

fourth quarters of 1976, loans and advances abroad were respectively up

by 43%, 55%, 37% and 32% compared to the corresponding quarters in 1975.

It is probable that some of the reduction in this growth in the last

quarter was associated with an unwillingness by banks to increase their

overseas assets given the risks of exchange rate changes and the prevailing

interest rates. This increase in lending abroad has its counterpart in

the liabilities of the banks. Prior to 1973 the banks as a whole maintained

a large net positive balance with banks abroad and the amounts due to banks

abroad remained a relatively small part of total liabilities. After 1973

the amount due to banks abroad grew rapidly which in part was a reflection

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